Historically dominated by the public sector, the healthcare industry in the Kurdistan Region has recently been revitalized via increased private sector involvement. In part because of the favorable 2006 Investment Law and the strenuous work of the Kurdistan Board of Investment (BOI), the healthcare sector has seen an influx of over $927 million in investment. Of those funds, $732 million resulted from the BOI licensing process and $195 million was rooted in foreign investment. As a result, the Kurdistan Region is now home to a total of 99 hospitals, of which 40 are private.

Expertise and technical ability are quickly expanding in step with increased investment in the sector. Heart surgery, neurosurgery, and kidney transplants are each available in Erbil, Slemani, and Duhok. Internationally accredited diagnostics and testing are available from Erbil’s Medya Diagnostic Center. Moreover, Slemani’s Faruk Medical Center (FMC), a 160-bed, state-of-the-art hospital is scheduled to open in December 2013, and is developing a modern oncology center. Similarly in the pharmaceutical sector, Erbil’s Awamedica and Slemani’s Pioneer Pharmaceuticals are applying international best practices to pharmaceutical manufacturing in the Region.

In terms of overall coverage, the Kurdistan Region has an impressive health network. According to the Ministry of Planning (MOP), the majority of the population of the Region lives within 30 minutes of some form of primary health care center (PHC). In more remote areas, hospitals and emergency services have become increasingly available. Each of the three governorates in the Kurdistan Region features public general, emergency, and pediatric hospitals. The quality of service, however, is largely thought to be lacking. According to Hawre Daro, CEO of Faruk Group Holding, those with the means to do so in the past decades have tended to travel abroad for improved healthcare provision when sick.

The private sector is therefore attempting to close the perceived gap in quality between the Region’s healthcare and international standards—and it is doing so quickly. Erbil, which now has more private hospitals than public, and has received the majority of private investment in the sector, is becoming a regional destination for healthcare provision. Already, over 50% of patients at some of Erbil’s private hospitals come from outside the Kurdistan Region in order to access improved healthcare.

Public Healthcare Management

Recent reduction of the bureaucracy surrounding the public healthcare industry in the Kurdistan Region has helped promote localized management at medical facilities. This system intends to free local and regional health officials to determine daily operations policies, thereby improving the capacity of senior officials within the Ministry of Health (MOH) to determine policy. Indeed, as a result of this decentralization, the Kurdistan Region has been able to implement professional vaccination programs and improved medical training.

While 40% of the Region’s hospitals are private, they account for only 9% of total capacity.

Additionally, the MOH and the BOI are making efforts to further reform the system. The majority of the government funding for the health sector has been allocated to developing public primary care. This is being done in an effort to decrease the prevalence of expensive and dangerous secondary and tertiary care. In addition, more attention is now being paid to improving staff capabilities, as well as to modernizing both the knowledge and equipment utilized in such facilities. For example, to improve the quality of maternal and neonatal healthcare, the MOH signed an agreement with Britain’s Royal College of Obstetricians and Gynecologists to improve local training and education. The KRG has also developed a PR campaign to educate the population on the dangers of smoking, obesity, and other health-related hazards.

Finally, the public sector intends to increase investment in healthcare to address increasing demands on the system. The Ministry of Planning intends to spend $2.1 billion on healthcare investment between 2013-2020, building 165 new PHCs, and increasing hospital capacity in the Region by 3,200 (representing a 42% increase). Much of this expansion will be carried out through public tender, with opportunities for both private and foreign involvement.

Doctors and Nurses

While health coverage in Kurdistan is excellent, limitations in the Region’s healthcare workforce have created some vulnerability in the sector. A 2012 report commissioned by the KRG concluded that while the Region’s doctors are well trained, they are lacking in number. The ratio of doctors per capita is lower in the Kurdistan Region than in most other Middle Eastern countries. This translates to limited access to physicians for many people in the Region, despite the overall prevalence of clinics and hospitals. Many PHCs, particularly in rural areas, lack doctors and are entirely staffed by nurses. Additionally, limited salaries in the public sector lead many to seek more substantial income from the private sector. Thus, many doctors split their workdays between public and private practice, and are subsequently overworked, which decreases the quality of care and simultaneously reduces the public’s already limited access physicians. The number of nurses currently active in the Region adequately covers present demand. However, both the MOH and numerous other health agencies are concerned about the poor quality of nursing care in Kurdistan, as well as the lack of defined nursing competencies and responsibilities. Nursing in the Region is therefore in need of immediate attention. While private hospitals currently address these issues by employing international recruiting agencies to hire foreign healthcare specialists into the Region, the KRG is also expanding doctor and nurse training to ameliorate the situation. The KRG Ministry of Planning intends to graduate 2,097 new doctors between 2013-2020, representing a 38% increase, and is improving nurse training, often through international partnerships.

The KRG Ministry of Planning intends to graduate 2,097 new doctors between 2013-2020, representing a 38% increase.

Private Sector Healthcare

Despite these public sector healthcare initiatives, only 4.8% of the KRG’S total budget in 2013 was allocated to the health sector. This allocation is extremely small by international standards, and according to BOI sources, it covered only about 40% of the industry’s needs. Thus, a majority of the development and improvement in the health sector can be attributed to private and/or foreign investment. The BOI has therefore played a critical role in supporting the private healthcare system, and facilitating public-private partnerships. Since 2006, the BOI has licensed 34 total private healthcare projects (roughly 6% of all BOI projects), worth a total of over $732 million.

Moreover, such projects also incorporate international expertise, thereby improving the overall quality of care in the Region. Pharmaceutical and diagnostic companies in particular have been keen to capitalize on this level of foreign involvement, using international accreditation to institutionalize high quality products and processes. FMC is expected to open as one of the most modern health facilities in Iraq, and is relying extensively on foreign expertise. The facility plans to begin operations with roughly 90% of its workforce composed of foreign workers. The hospital has signed a 10-year agreement with Turkish private healthcare giant Acibadem Healthcare Group for the administrative and operational management of FMC. Further, it is employing international recruiting agencies to hire highly qualified healthcare professionals from India, the Philippines, Turkey, Jordan, and other locations. By utilizing foreign expertise, FMC expects to gain Joint Commission International (JCI) accreditation from the Joint Commission, a US-based quality assessment and accreditation organization. As local professionals develop their knowledge and expertise to the required level, FMC will then seek to phase out foreign workers in favor of their local counterparts. The increase in modern, private hospitals such as FMC will not likely lead to universal privatization of the sector. While private hospitals make up 40% of the total number of hospitals in the Region, their capacity is much lower than that of the public healthcare system. Private hospitals account for only 9% of the Region’s total number of hospital beds. According to Hawre Daro, universal privatization should not be an overall goal in the Region. Rather, modern, private hospitals should pressure improvement and innovation in the public healthcare sector.

Going forward, there is significant opportunity for additional investment in private healthcare. Underinvestment by the KRG in the public healthcare system, as mentioned earlier, coupled with the Region’s rapid economic development is leading to increased demand in premium healthcare. However, total foreign direct investment in the sector is still relatively low, and constitutes only $195 million. For comparison, FMC alone represents an investment of over $100 million into the sector. Total BOI licensed foreign healthcare investment only comprises 2.4% of overall BOI investment. As private hospitals continue attracting the many patients that would otherwise have traveled abroad for medical services, it is safe to expect investment in the sector to grow.

Number of Hospitals, by Governorate and Type

TypeErbilSlemaniDohukTotal
Public2228959
Private2412440
Total46401399

Capital City Leads the Way

Erbil is the epicenter of private healthcare in the Region. The city has become a regional destination for healthcare provision, with patients arriving from across Iraq. Of the 34 BOI licenses granted to private healthcare projects, 26 (constituting 75%) were located in the Erbil governorate. In addition, these projects had a total investment capital of $596 million (roughly 81% of all funds allocated to the healthcare licenses). 24 of Erbil’s 46 hospitals are now private, making Erbil the only governorate in the Region with a majority of private hospitals.

In addition to several state-of-the-art hospitals, Erbil is host to Awamedica, a modern, international-quality pharmaceuticals manufacturer, and Medya Diagnostic Center, an internationally accredited diagnostics lab and clinic. However, private healthcare elsewhere in the Region, such as Pioneer Pharmaceuticals and the FMC in Slemani, has begun to decentralize the healthcare sector throughout the Region.

Pharmaceutical Improvement

Improvements in the Region’s pharmaceuticals industry have been successful as well. Not long ago, all of the Region’s pharmaceuticals were imported, and a high percentage were low quality or counterfeit. In a public-private approach, the problem is quickly being solved. Two Kurdish private pharmaceuticals companies, Awamedica and Pioneer, have been established recently to provide high quality, low cost medicines for the Region.

Meanwhile, the KRG is tightening security to identify and destroy counterfeit medications. According to Dr. Amir Chalabi, Chairman of the Kurdistan Pharmacists Union, a new system will soon be in place that will allow for the monitoring and standardized pricing of all medicines sold at pharmacies in the Kurdistan Region. According to Dr. Chalabi, “Additionally, this system will help remove the price differences in pharmacies and eliminate the phenomenon of physicians making agreements with specific pharmacies and sending patients only to these pharmacies.” Approaches such as these have been largely successful thus far, with the MOH reporting that over 650 tons of low quality or counterfeit medicines have been destroyed in 2013 alone. In addition, local production of high-quality pharmaceuticals has reduced prices considerably, thereby limiting the appeal of cheaper, lower-quality medicines. Such initiatives have also helped the Kurdistan Region to become increasingly self-sufficient in terms of its pharmaceutical supply.